Attached files
| file | filename |
|---|---|
| 8-K - UNUM GROUP 8-K - Unum Group | a6159327.htm |
| EX-99.2 - EXHIBIT 99.2 - Unum Group | a6159327ex992.htm |
Exhibit
99.1
 |
1
Fountain Square
Chattanooga,
TN 37402
www.unum.com
|
| news |
FOR
IMMEDIATE RELEASE
|
|
|
Contact
|
Thomas
A. H. White
423
294 8996
|
|
Unum
Group Reports Fourth Quarter 2009 Results
Favorable
Operating Trends and Solid Capital Position Maintained
CHATTANOOGA, Tenn. (February 2, 2010) – Unum
Group (NYSE: UNM) today reported net income of $199.4 million ($0.60 per diluted
common share) for the fourth quarter of 2009, compared to net income of $41.8
million ($0.13 per diluted common share) for the fourth quarter of
2008.
Included in the results for the fourth
quarter of 2009 are net realized after-tax investment losses of $18.9 million
($0.06 per diluted common share), compared to $167.6 million ($0.50 per diluted
common share) in the fourth quarter of 2008. Net realized after-tax investment
losses for the fourth quarter of 2009 include an after-tax gain of $22.7 million
resulting from changes in the fair value of an embedded derivative in a modified
coinsurance contract, compared to an after-tax loss of $120.1 million in the
fourth quarter of 2008. Also included in net realized after-tax investment
losses for the fourth quarter of 2009 is a net realized after-tax investment
loss of $41.6 million related to sales and write-downs of investments, compared
to $47.5 million in the fourth quarter of 2008.
Adjusting for these items, income on an
after-tax basis was $218.3 million ($0.66 per diluted common share) in the
fourth quarter of 2009, compared to $209.4 million ($0.63 per diluted common
share) in the fourth quarter of 2008.
“The
Company had another solid quarter and we closed the year well positioned for the
year ahead,” said Thomas R. Watjen, president and chief executive
officer. “While we believe that the general business and economic
environment will continue to pose challenges, the actions we have taken the past
several years have positioned us well and provide us with significant operating
and financial flexibility.”
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.
RESULTS BY
SEGMENT
In the following discussions of the
Company’s operating segment results, “operating revenue” excludes net realized
investment gains and losses. “Operating income” or “operating loss”
excludes income tax and net realized investment gains and losses.
Unum US
Segment
Unum
US reported operating income of $203.0 million in the fourth quarter of 2009, an
increase of 11.2 percent from $182.6 million in the fourth quarter of 2008.
Premium income for the segment declined 3.1 percent to $1,207.9 million in the
fourth quarter of 2009; premium income in the fourth quarter of 2008 was
$1,246.6 million.
Within the
Unum US operating segment, the group disability line of business reported
operating income of $72.6 million in the fourth quarter of 2009, compared to
operating income of $59.7 million in the fourth quarter of 2008. The
benefit ratio for the fourth quarter of 2009 was 84.6 percent compared to 88.7
percent in the fourth quarter of 2008, reflecting a generally consistent rate of
claim recoveries and net favorable claims experience in the group long-term
disability line of business as compared to the fourth quarter 2008. Premium
income in group disability declined 5.9 percent to $535.6 million in the fourth
quarter of 2009, compared to $569.2 million in the fourth quarter of 2008.
Increased competition, along with soft economic conditions and the Company’s
ongoing commitment to disciplined pricing, renewals, and risk selection, were
contributing factors to the decline in the current premium. Sales of fully
insured group long-term disability products in the fourth quarter of 2009
decreased 2.6 percent to $75.4 million, compared to $77.4 million in the fourth
quarter of 2008. Sales of fully insured group short-term disability products
increased 12.3 percent to $34.8 million in the fourth quarter of 2009, compared
to $31.0 million in the fourth quarter of 2008. Premium persistency
in the group long-term disability line of business was 86.9 percent in 2009,
compared to 87.8 percent in 2008. Case persistency for this line was 87.4
percent in 2009, compared to 89.2 percent in 2008. Premium persistency in the
group short-term disability line of business was 86.8 percent in 2009, compared
to 82.1 percent in 2008. Case persistency for the short-term disability line was
86.5 percent in 2009, compared to 88.2 percent in 2008.
2
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.
The group
life and accidental death and dismemberment line of business reported a 5.2
percent decrease in operating income to $47.7 million in the fourth quarter of
2009, compared to $50.3 million in the fourth quarter of 2008. Premium income
for this line of business declined 2.6 percent to $289.4 million in the fourth
quarter of 2009, compared to $297.1 million in the fourth quarter of 2008, due
to the same conditions affecting group disability premium
income. Sales of group life and accidental death and dismemberment
products declined 8.2 percent in the fourth quarter of 2009 to $84.3 million
from $91.8 million in the fourth quarter of 2008. Premium persistency in the
group life line of business was 86.9 percent in 2009, compared to 83.8 percent
in 2008. Case persistency in the group life line of business for 2009 was 87.2
percent compared to 89.1 percent in 2008.
The Unum
US supplemental and voluntary lines of business reported a 13.9 percent increase
in operating income to $82.7 million in the fourth quarter of 2009, compared to
$72.6 million in the fourth quarter of 2008. Premium income for
supplemental and voluntary lines increased 0.7 percent to $382.9 million in the
fourth quarter of 2009, compared to $380.3 million in the fourth quarter of
2008. Relative to the fourth quarter of 2008, sales in the voluntary
benefits line of business increased 12.6 percent in the fourth quarter of 2009,
sales in the individual disability – recently issued line decreased 10.4
percent, and group long-term care sales decreased 28.0 percent.
3
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.
Unum UK
Segment
Unum UK
reported operating income of $61.3 million in the fourth quarter of 2009, an
increase of 12.3 percent from $54.6 million in the fourth quarter of
2008. Results for the quarter, when translated into dollars,
benefitted from the exchange rate of the dollar to British pound
sterling. In local currency, operating income for the fourth quarter
of 2009 increased 8.7 percent, to £37.6 million from £34.6 million in the fourth
quarter of 2008.
The
benefit ratio in the fourth quarter 2009 was 59.6 percent, compared to 63.0
percent in the comparable quarter in 2008. The lower benefit ratio for the
current quarter reflects net favorable claims experience in the group long-term
disability line, which was partially offset by higher paid claims in the group
life line. Premium income decreased 1.3 percent to $180.0 million in
the fourth quarter of 2009, compared to $182.3 million in the fourth quarter of
2008. In local currency, premium income decreased 4.8 percent to
£110.2 million in the fourth quarter of 2009, compared to £115.8 million in the
fourth quarter of 2008. Premium persistency in the group long-term disability
line of business was 88.6 percent in 2009, compared to 87.4 percent in 2008.
Premium persistency in the group life line of business was 80.1 percent in 2009,
compared to 74.9 percent in 2008. Sales increased 55.6 percent to $42.0 million
in the fourth quarter of 2009, compared to $27.0 million in the fourth quarter
of 2008, aided in part by the exit of another large insurance provider from the
U.K. group risk market. In local currency, sales for the fourth
quarter of 2009 increased 47.7 percent to £25.7 million, compared to £17.4
million in the fourth quarter of 2008.
4
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.
Colonial Life
Segment
Colonial
Life reported a 3.0 percent increase in operating income to $68.3 million in the
fourth quarter of 2009, compared to $66.3 million in the fourth quarter of
2008. The benefit ratio in the fourth quarter of 2009 was 48.5
percent, compared to 48.3 percent for the same period in 2008. The
benefit ratio in the accident, sickness, and disability line was slightly lower
in the fourth quarter of 2009 relative to the year ago quarter, while the
benefit ratios in the life and cancer and critical illness lines were both
higher than the year ago quarter due to higher claims
experience. Premium income for the fourth quarter of 2009 increased
3.3 percent to $257.4 million, compared to $249.1 million in the fourth quarter
of 2008. Sales increased 3.7 percent to $119.7 million in the fourth
quarter of 2009 from $115.4 million in the fourth quarter of 2008, driven
primarily by a strong level of sales in the public sector market. New
accounts increased 17.9 percent in the fourth quarter of 2009 compared to the
fourth quarter of 2008, and average weekly producers increased 7.9 percent
compared to the fourth quarter of 2008.
Individual Disability –
Closed Block Segment
The
Individual Disability – Closed Block segment reported operating income of $5.8
million in the fourth quarter of 2009, compared to $7.1 million in the fourth
quarter of 2008. The interest adjusted loss ratio for the segment was 81.6
percent in the fourth quarter of 2009, compared to 82.6 percent in the fourth
quarter of 2008. Risk results in this segment remained generally
consistent with the trends of the past several quarters.
Corporate
and Other Segment
The
Corporate and Other segment reported an operating loss of $16.6 million in the
fourth quarter 2009, compared to $0.4 million in the fourth quarter of 2008,
primarily due to higher interest expense as well as an increase in pension
costs. The fourth quarter of 2008 also included $7.6 million of other
income related to a refund of interest primarily attributable to prior tax
years.
5
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.
OTHER
INFORMATION
Capital
Management
At the end of the fourth quarter of
2009, combined risk-based capital for the traditional US insurance companies was
approximately 382 percent; leverage was 20.5 percent; and holding company
capital equaled $915 million.
Leverage
is measured as total debt to total capital, which the Company defines as total
long-term and short-term debt plus stockholders’ equity, excluding the net
unrealized gain or loss on securities and the net gain or loss on cash flow
hedges. Leverage also excludes the non-recourse debt and associated
capital of Tailwind Holdings, LLC and Northwind Holdings, LLC.
Shares
Outstanding
The Company’s average number of shares
(000s) outstanding, assuming dilution was 332,998.5 for the fourth quarter of
2009, compared to 330,981.5 for the fourth quarter of 2008.
Book
Value
Book value per common share as of
December 31, 2009 was $25.62 compared to $19.32 at December 31,
2008.
OUTLOOK
The
Company is maintaining its previously stated outlook for full year 2010 and
anticipates operating earnings growth for the year to be in a range of four
percent to six percent.
6
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.
NON-GAAP
RECONCILIATION
The Company analyzes its performance
using non-GAAP financial measures which exclude certain items and the related
tax thereon from net income. The Company believes operating income or
loss, excluding realized investment gains and losses, which are recurring, is a
better performance measure and a better indicator of the profitability and
underlying trends in its business. Realized investment gains and
losses are primarily dependent on market conditions and general economic events
and are not necessarily related to decisions regarding the Company’s underlying
business. The Company believes leverage excluding the non-recourse
debt as well as unrealized gains and losses on securities and the net gain or
loss on cash flow hedges, which also tend to fluctuate depending on market
conditions and general economic trends, is an important measure. For
reconciliation to the most directly comparable GAAP measures, refer to the
attached digest of earnings.
CONFERENCE CALL
INFORMATION
Members of Unum Group senior management
will host a conference call on Wednesday, February 3, 2010 at 10:00 A.M.
(Eastern Time) to discuss the results of operations for the fourth
quarter. Topics may include forward-looking information such as the
Company’s outlook on future results, trends in operations, and other material
information.
The dial-in number for the conference
call is (888) 797-2994
for U.S. and
Canada. For International, the dial-in number is (913) 312-0828. A live webcast of
the call will also be available at www.investors.unum.com
in a listen-only mode. It is recommended that webcast viewers access
the “Investors” section of the Company’s website and opt-in to the webcast
fifteen minutes prior to the start of the call. A replay of the call
will be available by telephone and on the Company’s website through Wednesday,
February 10, 2010.
In conjunction with today’s earnings
announcement, the Company’s Statistical Supplement for the fourth quarter of
2009 is available on the “Investors” section of the Company’s
website.
7
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.
ABOUT UNUM
GROUP
Unum (www.unum.com) is one
of the leading providers of employee benefits products and services and the
largest provider of disability insurance products in the United States and the
United Kingdom.
SAFE HARBOR
STATEMENT
Statements in this press release that
are not historical facts, such as the Company's earnings outlook, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are made
based on management's expectations, plans, and beliefs concerning future
developments. These forward-looking statements are not a guarantee of
future performance and involve risks and uncertainties that could cause actual
results to differ materially from those suggested by the forward-looking
statements. These risks and uncertainties include such matters as (1)
unfavorable economic or business conditions, both domestic and foreign,
including the continued financial market disruption; (2) investment results,
including but not limited to, realized investment losses resulting from
impairments that differ from our assumptions and historical experience; (3)
rating agency actions, state insurance department market conduct examinations
and other inquiries, other governmental investigations and actions, and negative
media attention; (4) changes in interest rates, credit spreads, and securities
prices; (5) currency exchange rates; (6) changes in our financial strength and
credit ratings; (7) changes in claim incidence and recovery rates due to, among
other factors, the rate of unemployment and consumer confidence, the emergence
of new diseases, epidemics, or pandemics, new trends and developments in medical
treatments, and the effectiveness of claims management operations; (8) increased
competition from other insurers and financial services companies due to industry
consolidation or other factors; (9) legislative, regulatory, or tax changes,
both domestic and foreign, including the effect of potential legislation and
increased regulation in the current political environment; (10) effectiveness of
our risk management program; (11) the level and results of litigation; (12)
effectiveness in supporting new product offerings and providing customer
service; (13) actual experience in pricing, underwriting, and reserving that
deviates from our assumptions; (14) lower than projected persistency and lower
sales growth; (15) fluctuation in insurance reserve liabilities; (16) ability
and willingness of reinsurers to meet their obligations; (17) changes in
assumptions related to intangible assets such as deferred acquisition costs,
value of business acquired, and goodwill; (18) ability of our subsidiaries to
pay dividends as a result of regulatory restrictions; (19) events or
consequences relating to terrorism and acts of war, both domestic and foreign;
(20) changes in accounting standards, practices, or policies; and (21) ability
to recover our systems and information in the event of a disaster or
unanticipated event.
8
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.
For further information about risks and
uncertainties that could affect actual results, see the Company's filings with
the Securities and Exchange Commission, including information in the sections
titled "Cautionary Statement Regarding Forward-Looking Statements" and "Risk
Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2008 and any subsequently filed Forms 10-Q. The
forward-looking statements in this press release are being made as of the date
of this press release, and the Company expressly disclaims any obligation to
update or revise any forward-looking statement contained herein, even if made
available on our website or otherwise.
###
9
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.
DIGEST
OF EARNINGS
(Unaudited)
Unum Group
(UNM:NYSE)
and
Subsidiaries
|
($
in millions, except share data)
|
Three
Months Ended
|
Twelve
Months Ended
|
||||||||||||||
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December
31
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December
31
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|||||||||||||||
|
2009
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2008
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2009
|
2008
|
|||||||||||||
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Operating
Revenue by Segment
|
$ | 2,522.5 | $ | 2,581.4 | $ | 10,079.3 | $ | 10,448.2 | ||||||||
|
Net
Realized Investment Gain (Loss)
|
(25.9 | ) | (257.7 | ) | 11.7 | (465.9 | ) | |||||||||
|
Total
Revenue
|
$ | 2,496.6 | $ | 2,323.7 | $ | 10,091.0 | $ | 9,982.3 | ||||||||
|
Operating
Income by Segment
|
$ | 321.8 | $ | 310.2 | $ | 1,280.6 | $ | 1,289.9 | ||||||||
|
Net
Realized Investment Gain (Loss)
|
(25.9 | ) | (257.7 | ) | 11.7 | (465.9 | ) | |||||||||
|
Income
Tax
|
96.5 | 10.7 | 439.7 | 270.8 | ||||||||||||
|
Net
Income
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$ | 199.4 | $ | 41.8 | $ | 852.6 | $ | 553.2 | ||||||||
|
PER
SHARE INFORMATION
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||||||||||||||||
|
Net
Income Per Common Share
|
||||||||||||||||
|
Basic
|
$ | 0.60 | $ | 0.13 | $ | 2.57 | $ | 1.62 | ||||||||
|
Assuming
Dilution
|
$ | 0.60 | $ | 0.13 | $ | 2.57 | $ | 1.62 | ||||||||
|
Weighted
Average Common Shares - Basic (000s)
|
331,672.8 | 330,846.0 | 331,266.2 | 341,022.8 | ||||||||||||
|
Weighted
Average Common Shares - Assuming Dilution (000s)
|
332,998.5 | 330,981.5 | 332,136.2 | 341,560.3 | ||||||||||||
|
RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES
|
||||||||||||||||
|
Three
Months Ended December 31
|
||||||||||||||||
| 2009 | 2008 | |||||||||||||||
|
(in
millions)
|
per
share *
|
(in
millions)
|
per
share *
|
|||||||||||||
|
After-tax
Operating Income
|
$ | 218.3 | $ | 0.66 | $ | 209.4 | $ | 0.63 | ||||||||
|
Net
Realized Investment Loss, Net of Tax
|
(18.9 | ) | (0.06 | ) | (167.6 | ) | (0.50 | ) | ||||||||
|
Net
Income
|
$ | 199.4 | $ | 0.60 | $ | 41.8 | $ | 0.13 | ||||||||
|
*
Assuming Dilution
|
||||||||||||||||
|
December
31
|
||||||||||||||||
| 2009 | 2008 | |||||||||||||||
|
(in
millions)
|
per
share
|
(in
millions)
|
per
share
|
|||||||||||||
|
Total
Stockholders' Equity (Book Value)
|
$ | 8,500.1 | $ | 25.62 | $ | 6,397.9 | $ | 19.32 | ||||||||
|
Net
Unrealized Gain (Loss) on Securities
|
379.6 | 1.14 | (832.6 | ) | (2.51 | ) | ||||||||||
|
Net
Gain on Cash Flow Hedges
|
370.8 | 1.12 | 458.5 | 1.38 | ||||||||||||
|
Subtotal
|
7,749.7 | 23.36 | 6,772.0 | 20.45 | ||||||||||||
|
Foreign
Currency Translation Adjustment
|
(78.7 | ) | (0.24 | ) | (177.6 | ) | (0.54 | ) | ||||||||
|
Unrecognized
Pension and Postretirement Benefit Costs
|
(330.7 | ) | (0.99 | ) | (406.5 | ) | (1.23 | ) | ||||||||
|
Total
Stockholders' Equity, As Adjusted
|
$ | 8,159.1 | $ | 24.59 | $ | 7,356.1 | $ | 22.22 | ||||||||
|
December
31
|
||||||||||||||||
| 2009 | ||||||||||||||||
|
(in
millions)
|
||||||||||||||||
|
Debt,
As Reported
|
$ | 2,549.6 | ||||||||||||||
|
Exclude
Non-recourse Debt
|
785.2 | |||||||||||||||
|
Debt,
As Adjusted
|
$ | 1,764.4 | ||||||||||||||
|
Total
Stockholders' Equity, As Reported
|
$ | 8,500.1 | ||||||||||||||
|
Exclude
Net Unrealized Gain on Securities and Net Gain on
|
||||||||||||||||
|
Cash
Flow Hedges
|
750.4 | |||||||||||||||
|
Exclude
Northwind and Tailwind Capital
|
907.0 | |||||||||||||||
| 6,842.7 | ||||||||||||||||
|
Debt,
As Adjusted
|
1,764.4 | |||||||||||||||
|
Total
Capital, As Adjusted
|
$ | 8,607.1 | ||||||||||||||
|
Debt
to Capital Ratio
|
20.5 | % | ||||||||||||||
10
UNUM IS A
REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING
SUBSIDIARIES.